Leumi, Israel’s Second Largest Bank, to Pay 1 Billion Shekels on Tax Evasion Charge

In a study carried out by the IRS, it was reported that US multinational corporations were shifting their funds offshore to save on profits. Bank Leumi, Israel’s second largest bank will now have to pay a sum of 1 billion shekels as penalty for aiding them.

Many billionaires have their accounts at various banks located at offshore hideaways. These accounts are usually opened at banks of nations’ that have lowered or no taxes to be paid. According to an investigation carried out by the US Justice Department, it was found out that tax evasion was occurring and the second largest bank in Israel, Leumi was being used as a base.

Tax Evasion

To dig deep into the tax evasion case, US authorities contacted Leumi regarding its American clients who were found guilty of dodging payment of taxes. Leumi is believed to have cooperated with the authorities and has asked its American clients to disclose their account details. The investigation was carried out for the time period of 2002 till 2010. Hapoalim, Israel’s largest bank along with Mizrahi –Tefahot, Israel’s fourth largest bank are believed to have been approached by the US authorities, but Leumi has been the first and the only bank in the Israel banking system that has reached an agreement with the US Justice Department.

This is the same Justice Department that will not prosecute the IRS for violating peoples’ rights that disagreed with them. This is the same Justice Department that sold high powered weaponry to Mexican gangsters that have left scores of Mexicans dead.

A month ago, Credit Suisse had paid $2.5 billion after investigations were carried out by the US authorities who proved that its American clients had dodged tax payments and that it (Credit Suisse) had helped them do so. Now, Leumi is expected to pay 1 billion shekels for helping its American clients evade taxes.

A reliable source added, “Leumi didn’t understand the meaning of the investigation” and that Leumi did not realize that it had indulged in an illegal activity at first. After offering to pay a huge sum of 490 million shekels, the bank is believed to have agreed to pay an extra 460 million shekels, totaling to 950 million shekels. Not all issues have been resolved as a result of this investigation hence the bank is still holding discussions with additional US authorities.

The Onset of Investigation

The investigation in this tax evasion case started when the US Justice Department fined the Swiss bank UBS in 2009 with $780 million. Along with that, UBS also had to give out sensitive information about all its clients. The Justice Department then started its investigations on Israeli banks and few other Swiss units in Israel in 2011. After three years of investigations, it has now accused Leumi in the tax evasion probe.

But many Americans accuse the IRS of being out of touch and irresponsible and law breakers themselves.

Political Parties Responsible

The United States IRS taxes corporations at 35 percent, which is 10 percent higher compared to other nations. This encourages American citizens to hold accounts offshore. Not only this, it also compels companies to keep jobs off shore because the price of doing business in America is just too massive. With rising health care and energy costs, this is not surprising that some people and entities break the law to try to keep more of their hard earned money.